Arista Networks on Monday became the latest in a string of cloud players to drum up investor enthusiasm with the filing of an initial public offering. As a challenger to industry leader Cisco Systems, Arista is looking to raise $200 million in the IPO, but the final size of the offering could turn out differently.
The 10-year-old, Santa Clara, Calif.-based company builds switches that handle traffic at Internet data centers for companies such as Facebook, Yahoo and Citigroup, and is led by former Cisco exec Jayshree Ullal.
At the core of Arista's cloud-networking platform is its Extensible Operating System, or EOS, which the company said was purpose-built to be fully programmable and highly modular.
However a possible wrench was thrown into the fray last November, when a Menlo Park, Calif. research firm named Optumsoft claimed ownership of certain components in Arista's EOS network, which is incorporated into all of Arista's products, pursuant to a 2004 agreement between the companies. Optumsoft has requested that Arista cease distribution of any of Optumsoft's software in source code form and the unauthorized access or disclosure of its source code to third parties.
Optumsoft was founded by Stanford University professor and Silicon Valley entrepreneur David Cheriton, who was also a founding officer and former board member at Arista. He resigned from Arista's board in early March.
Arista disclosed the conflict in the IPO filing, stating the following:
We intend to vigorously defend against any action brought against us by Optumsoft. However, we cannot be certain that, if litigated, any claims by Optumsoft would be resolved in our favor. For example, if it were determined that Optumsoft owned components of our EOS network operating system, we would be required to transfer ownership of those components and any related intellectual property to Optumsoft.
But conflicts aside, Arista said it has experienced rapid revenue growth over the last several years, turning profits each fiscal year since 2010 and boasting an 86 percent revenue growth in 2013, with sales clocking in at $361.2 million.
Also during that timeframe Arista grew its end-customer base from approximately 570 to approximately 2,340. Still, even with those numbers, 43 percent of Arista's sales came from just its 10 largest customers, including Microsoft, which accounted for 22 percent of the company's sales last year.